What happens if MicroStrategy gets a margin call?

Question

So its in the news that MicroStrategy took out a huge loan to buy bitcoin and that if the prices falls to ~$21,000 that they would receive a margin call on the loan.https://www.cnbc.com/2022/06/15/bitcoin-microstrategy-denies-it-received-margin-call-against-silvergate-loan.htmlSo the question is, what is the consequences of this? Will MSTR have to sell some of their bitcoin further fueling the sell-off? Do they just borrow against other collateral? Is this a big deal or a non-event?

shinryuu · Accepted Answer

A margin call is an event where you have to either deposit additional funds or sell some of the assets. So getting margin called when you have additional funds doesn't have to be a big event.

hnthrowaway0328 · Answer

The fact that the company invests heavily in Bitcoin is a surprise for me. After a second thought this probably is a bit more risky but no different in essence from other investments, in bonds or in stocks. Still I hope what the CEO said was true i.e. the company has enough $$ to cover its loan. There could be other black swan events that blocks converting Bitcoin to USD.

Miner49er · Answer

It already fell below $21k and they weren't margin called, apparently. I guess they have the funds to cover.